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Risk Management, Well Done

As vice president of risk management for The Wendy’s Co., Andy Kuchar has within his purview more than 40,000 employees working at 1,427 restaurants. Charged with the safety of that many workers and the tens of millions of guests the chain serves each year, working proactively is paramount to prevent injuries and ensure that proper coverage is in place.

The Wendy’s Co. owns approximately one-fifth of its restaurants; the remainder are franchises. Each franchise agreement includes the insurance coverage needs that every Wendy’s restaurant is required to carry, including General Liability, Workers’ Compensation, Excess Liability and Property cover.

Kuchar’s office utilizes a preferred insurance program for franchisees through Marsh, which brokers all of its placements—but some of those insurers don’t write in certain parts of the country. As such, Wendy’s requires a network of carriers to cover all its bases, with multiple carriers in each market competing for the business.

“Some of the large programs, such as our Property and Excess Liability, have multiple insurance carriers participating,” he notes. “That said, AIG and ACE are our two most significant insurance partners: AIG on the property and executive-risk side and ACE on the casualty-risk side.” While the company is self-insured in 18 states including Florida, New York, Georgia and Louisiana, its insurance programs are not self-administered in any of them but by its TPA, Sedgwick.

Wendy’s risk management squad also includes two risk analysts, three casualty claims associates, three Workers’ Compensation claims associates and a claims manager, all based in its corporate headquarters in Dublin, Ohio. Kuchar is directly responsible for all coverage lines for the Wendy’s Co., including D&O, Workers’ Comp, General Liability, Excess Liability, Employment Practices Liability, Property and others, as well as several company-related organizations—two adoption-related charities (established by Wendy’s founder and former CEO Dave Thomas, who was adopted when he was six months old) and the restaurant chain’s political action committee (PAC).

When it comes to claims, Kuchar reveals, about 70% of the restaurant chain’s incurred costs stem from Workers’ Comp, while 30% fall under General Liability. The most significant exposures for both Wendy’s customers and its employees are not extraordinary in the fast-food space: For guests, it’s the usual slips, trips and falls. For employees, it’s sprains, burns and other typical food-prep injuries.

“Being a restaurant company, maintaining the highest degree of food safety is one our primary concerns,” he says. “If you’re cooking in your own house, how do you get hurt?” he muses. “Those losses are almost inherent to what you do, and that’s the challenge. Like a lot of disciplines, basic day-to-day ‘blocking and tackling’ executed well seems to yield the greatest results.”

Which is not to say they happen often, according to Kuchar. And while any chain of Wendy’s stature will attract a handful of unsubstantiated lawsuits per year, “the overwhelming majority aren’t genuine,” he says. “I was running through the math one day to see what the magnitude [of such claims] was, and 90 million people [in the U.S.] every year walk in to a Wendy’s that we operate. And if you look at the number of accidents that happen, it’s actually amazing—about one customer incident per million transactions.”

Similarly, on the Workers’ Comp side, Kuchar is encouraged to see just how low the accident rates really are. The math works out to more than one million hours worked before the company gets to a meaningful number.

“We have a strong emphasis on making certain that our employees have the right personal protective equipment available to minimize the risk of injury,” Kuchar says, citing as examples special mesh gloves that employees wear while slicing tomatoes, and box cutters outfitted with retracting blades to help prevent cuts.

One of Wendy’s signature menu items is its chili, which due to its temperature requires careful preparation. “We have specific procedures and equipment we use to make and move the chili to minimize the risk of a burn,” he says.

Long, heat-resistant gloves and special aprons are used for this purpose, along with a special cart that’s used to move the steaming dish from the station where it’s cooked to the area where it is served.

Despite everyone’s best efforts, employee accidents like cuts and burns still happen, he says. “When they do occur, we work hard to help the injured employee get appropriate medical care and return to work as quickly as possible.”

To that end, Wendy’s risk management program’s policy is to return employees as soon as possible, working within the restrictions provided by their treating physician and its TPA.

“There are occasions when we can’t accommodate an employee’s work restrictions because it might create a safety hazard for other restaurant employees,” he adds. “For example, any employee could need a walker while they recover from their injury, but a walker would be difficult to navigate around in the back of a restaurant.” In those cases, alternate duties are available.

Just a few years ago, Wendy’s refocused its return-to-work efforts, essentially making certain return policies were implemented across the board. Previously, as Kuchar explains, “If someone needed to sit on a stool for a week because they had a leg injury, some restaurants would have them at pick-up window, while others wouldn’t.”

At that time, return-to-work decisions were made primarily at the restaurant level, on a case-by-case basis; now, the risk-management department partners with an individual restaurant’s operations team to bring more consistency to such decisions. These days, he says, such policies are the same in Georgia as they are in New York. That effort has yielded significant reductions in work-related injury costs.

In terms of teaching employee safety, like many companies, Wendy’s has leveraged technology to deliver a large portion of training online through manager workstations via its intranet site.

Rather than approach safety and security as separate training modules, Kuchar notes, both components are integrated across the training modules. “We hope that sends the message that safety and security considerations are part of everything we do, not an afterthought,” he says.

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